Grid parity and the rooftop solar revolution

The costs of solar power are decreasing so fast that grid parity - where the cost of solar energy without subsidies equals the residential retail electricity rate - could be only a few years away for several cities in California and the United States.

San Francisco, Sacramento, Los Angeles, Riverside and San Diego are among 21 cities that could reach parity by 2018, according to the Institute for Local Self Reliance, which this month released a study entitled, "Rooftop Revolution: Changing Everything with Cost-Effective Local Solar."

The study claims the nation is on the cusp of expanded decentralized electrical generation, but also asks rhetorically if we are prepared. "The nearness of solar grid parity brings urgency to the discussion of electricity policy, from incentives to grid design," the authors state. "Well before any new fossil fuel power plants have passed their infancy, electricity from solar will be cheaper. . . It means that citizens and their elected leaders will have to carefully consider the policies that guide investment in the electricity system."

The push for decentralized energy isn't new. As noted in this blog from last year, decentralized energy means that rooftops of houses and other structures connected to the grid essentially become mini power producers. Localized power can come from other places too: such as the 90,000 square miles of right of way next to roads, the 600,000 acres of commercial parking lots or under the nation's 155,000 miles of transmission lines.

Those doesn't include solar projects that are placed near existing buildings or the solar land rush in California's deserts and marginal or unproductive former farm land in the San Joaquin Valley, where our nonprofit is based. (In a related story, PG&E plans to power up the sun in the next several years.)

How much residential rooftop solar power is created remains to be seen. Even though solar still
generates less than one-tenth of 1 percent of the nation’s electricity, the prospect of cost-competitive and widespread solar energy offers an unprecedented opportunity.

Giving things a push

The installed cost of solar has fallen 10% per year since 2006 and grid electricity price hikes have averaged 2% annually in the last decade. To capitalize, the authors recommend:

1/ phasing out rather than outright eliminating solar subsidies;
2/ easing permitting fees(which account for up to 20% of installed costs);
3/ creating feed-in tariffs (such as one just approved in Palo Alto);
4/ Revise upward the restriction that limit solar to 15% of the distribution grid to to 30%.

A friend, who like me is in her mid-50s, recently wondered aloud why solar and other sustainability programs didn't take off in the 1970s, when we were in our teens. "We (understood) it," she said. "But what happened?"

Maybe it was price. In 1974, solar electricity cost more than 100 times the residential retail electricity rate. Today, the differential in many communities is 2 times or less. "Grid connected solar is on the verge of becoming competitive – without incentives – with
conventional electricity," the report proclaims.

An explosion of localized solar would generate jobs, stimulate the economy and add value to the properties and to the grid. Each megawatt of power generates eight jobs and $240,000 in economic activity, the study projects. With a potential of 30,000 megawatts of new residential solar over six years comes a projected 250,000 jobs and $18 billion in economic stimulus.

The study is not the first on this subject - the report has links to others - and likely won't be the last. It claims to be conservative - basing its information on the assumption that solar panels last 25 years even though evidence shows they continue to produce power after that point.

Who knows what will happen, but solar power makes sense in California where the sun shines brightly for much of the year.

Video from U.S. Department of Energy